PERTH (miningweekly.com) – Australia’s resources and energy export earnings are forecast to surge to a record high A$425-billion for 2021/22.
Minister for Resources and Water Keith Pitt said the latest forecast, from the Department of Industry, Science, Energy and Resources’ March 2022 edition of the Resources and Energy Quarterly (REQ), is up a stunning 12% on the December 2021 REQ projection of A$379-billion.
“The March 2022 REQ has found that soaring demand and high prices for Australia’s gas, coal and oil are a key contributor to our record export earnings. In short our resources sector is knocking it out of the park and underpinning our economic growth, our energy security and our national security,” Pitt said.
“Critical global shortages in energy and resource commodities have led to record prices for many of our commodities.
“The REQ notes that with international coal prices at record levels, as the war in Ukraine and the ongoing La Niña weather conditions affect supply and demand, Australia’s combined coal export earnings are forecast to rise to about A$110-billion in 2021/22.
“Coal becomes only the second Australian commodity after iron-ore to break through the A$100-billion annual export mark,” Pitt said.
Australia’s metallurgical coal exports are forecast to rise from 171-million tonnes in 2020/21 to 184-million tonnes by 2026/27. The result reflects increased production in New South Wales and Queensland.
Australia’s metallurgical coal export values are forecast to track with price movements, rebounding from A$24-billion in 2020/21 to peak above A$60-billion in 2021/22, before falling back to A$26-billion by 2026/27.
Australian thermal coal exports declined from 213-million tonnes in 2019/20 to 192-million tonnes in 2020/21, but are expected to recover back to a 204– to 207-million-tonne range over the forecast period.
Surging prices are expected to push export values to a peak of A$45-billion in 2021/22, with a gradual (price-driven) easing to a more typical level of around A$15-billion (in real terms) by 2026/27.
Liquefied natural gas (LNG) exports earnings are forecast to rise from A$30-billion in 2020/21 to A$70-billion in 2021/22, and A$82-billion in 2022/23 as oil-price linked contract prices surge. Export earnings are forecast to return to around A$52-billion by the end of the outlook period.
Australian export volumes are forecast to increase to 82-million tonnes in 2021/22, as technical issues offset higher capacity utilisation at other plants. Volumes should then fluctuate between 79-million and 81-million tonnes over the outlook, the REQ stated.
Meanwhile, Pitt noted that the combined export earnings for lithium, nickel and copper will likely exceed A$23-billion in 2021/22, which would be an increase of 38% on the 2020/21 earnings.
“These forecasts again confirm just how important Australia’s resources and energy sector is to the nation’s economic and energy security,” the Minister said.
Australia’s lithium production is projected to more than triple over the outlook period, rising from 224 000 t of lithium carbonate equivalent (LCE) in 2020/21 to 692 000 t of LCE in 2026/27.
Australia’s lithium export earnings are projected to rise from A$1-billion in 2020/21 to A$6.7-billion in 2026/27, as lithium hydroxide production rises. A further five lithium hydroxide refining operations are projected to commence operations in Australia by 2026/27.
Australia’s nickel export volumes are forecast to rise from 273 000 t in 2021/22 to 326 000 t in 2026/27. Higher nickel prices may incentivise further expansion in nickel production to capitalise on the movement towards low-emission technologies.
The REQ noted that nickel export earnings are forecast to be stable as higher export volumes offset lower nickel prices. Australia’s export earnings are forecast at A$7-billion in 2021/22, and at A$7.3-billion in 2026/27.
Australia’s copper exports are projected to fall to 834 000 t in 2021/22 as scheduled maintenance is completed. Copper exports are expected to grow to over 1-million tonnes in 2026/27 as high copper prices incentivise production from new mines and mine expansions, and as prices and output grow, Australia’s copper export earnings are projected to lift from A$11.8-billion in 2020/21 to A$13.8-billion in 2026/27, up an average 2.6% a year.
Meanwhile, Australian gold production will reach 374 t by 2026/27, while lower gold prices are expected to push the value of Australia’s gold exports down to A$22-billion in 2026/27 in real terms.
For iron-ore, Australia’s export volumes are projected to grow steadily over the outlook period, from 897-million tonnes in 2021/22 to over one-billion tonnes by 2026/27. This reflects the ramp-up in production of several new and replacement mines in Western Australia.
Australia's iron-ore export earnings are projected to ease over the outlook period, from A$135-billion in 2021/22 to A$105-billion in 2022/23, and falling to A$74-billion by 2026/27.
“These record earnings will keep the benefits flowing to all Australians, including through company taxes, the taxes paid by the more than 270 000 people in high paying resources jobs, the more than one-million in indirect jobs generated by the sector and the royalties the states and the Northern Territory use to pay for services such as the hospitals, roads and schools across regional Australia,” said Pitt.
The REQ also says the further outlook, for 2022/23, could see resources and energy export earnings easing off record levels to $370-billion as bulk commodity prices return to more familiar levels. However global uncertainty and strong global demand sees plenty of upside in this forecast.